USA collection of sales tax out of state

Graham

Just FYI
I imagine very few if any will be impacted by all but one state, as the minimum threshold is $100k

However Kansas have no threshold, so as it stands, currently, any sales to Kansas should be taxed and reported.

https://blog.taxjar.com/economic-nexus-laws/

Calibrick

@graham, I'm so glad you raised this. I've been keeping an eye on the sales tax nexus laws, but when I last checked, the smallest "watch for" I had was for 100 orders in a single state (since I never come close to the $K thresholds) - I clearly missed KS's rule (or that happened since I last checked), thank you SO, so much!

We try super hard to follow all the rules - with our wild national deficit, I fully expect someone at some point to go "hey, let's invest in a LOT more IRS investigators 'cause they pay for themselves times three" (still amazed they haven't), so we don't want to get caught out unintentionally. Those penalties are brutal!

Calibrick

BTW, Graham, the icon I use for everything in my day job is the TARDIS. ;-)

Calibrick

Just an update - while this may end up going through courts for KS (the KS Attorney General has even disagreed with this application), it does appear as of 10/1/19, technically every US business of any size that sells any order or any size to a KS resident is required by KS to collect and submit sales tax to KS.

Geert Middelman

Thanks for this update. I am counting orders in every state, and I'm still good. Part of why I'm still on track is the way eBay is handling Sales Tax now. They simply add it to every order to a state that has this rule, and cross charge it again. No administration, no setting up a Nexus or anything.

For Arkansas (my 'home base'), I've set the sales tax charged slightly under the state average, and when receiving the order I correct it to city and county, and pay the difference myself. We're talking pennies here. This is the only way for me to be able to charge taxes here properly. Zip code separation doesn't work as that crosses towns or even counties here in Arkansas.

I need to double check Kansas now and either figure out how to do a Nexus there or stop orders from that state.

To be honest, looking at it from an outside perspective as I've moved here recently: isn't it time that Sales tax is arranged on Federal level? With online sales going through the roof (with Covid especially), state borders are not really applicable anymore concerning sales tax... Or am I saying something politically very scary or controversial?

Calibrick

I think most companies of any size would like to see a national (Federal) decision on Internet sales and tax nexuses so there is consistency for sellers - as you note yourself, the accounting is a PITA and costly, particularly for small businesses like all of us - and the Internet is borderless <s>. :-)

Federal law or even a formal regulation interpretation of some kind (is this FCC because it's Internet? SBA and Treasury? IRS? All of the above?) could be a force for good, in this particular case (just my humble opinion). Most states seem to zero in on something like $100k of sales OR 200 orders, then AFTER than you collect sales tax from subsequent orders the rest of the year. If I knew that up-front, I could live with that (though I'd prefer just a simple financial threshold, easier to track - and I'd never hit it <g>).

Just my respectful two cents!

Graham

@Calibrick
Well how about that, I used to be a huge dr who fan as a kid, lost interest after #4 Tom baker. Actually he was a hoot on and off the screen (I was working for bbc back then)

“My” dalek was photographed at LEGO land in England, looked like one of the artists had snuck it in on one of the tower blocks, it was gone next visit.
They have a dr who museum in wales, an original dalek on display its both amazing and funny to see what it’s made from, and yes, one “arm” is a toilet plunger!

Calibrick

@Graham, I had no idea there was a Doctor Who museum, how cool! We used to watch Tom Baker's Doctor here in the US on public broadcasting back in the 80s, which is how I stumbled over the show as a teen - followed immediately by another Terry Nation creation (isn't he credited for coming up with the Daleks?), Blake's 7. Wow, there's a show I haven't thought of in decades, lol.

That is SOOO awesome you got to work with him! What a neat experience to have had. I really enjoyed seeing him on-screen again a few years ago in the reunion show under Matt Smith's doctor, I think it was called The Day of the Doctor or some such. Matt, David Tennant, and an awesome walk-on by Tom Baker as a museum curator - it was fun to watch! :-)